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Declaratory Order - Caterpillar Product Services

DO 06-30-6-0030

On May 17, 2006, the Director issued a Declaratory Order for the above-referenced Petitioner. The Petitioner is a company that is licensed to sell extended service warranties. The Petitioner sells non-truck and truck extended service warranty contracts, national account on-highway vehicle extended service contracts and non-national account truck/machinery extended service contracts. The Petitioner is owned by CAT and CAT also owns CAT Dealerships, CAT Holdings, and CAT Insurance. The Petitioner sells warranty products to various companies, dealerships and individuals who may resell the warranties or may put the extended service warranty to its own use. The Petitioner wanted to know if an extended service warranty contract was considered to be tangible personal property in Iowa and the extent of protection from tax liability the Petitioner would receive if the Petitioner obtained a resale exemption certificate from a purchaser.

In this Declaratory Order, the Director held that the sale of an extended service warranty contract by the Petitioner is considered to be a sale of tangible personal property and is subject to Iowa sales or use tax pursuant to Iowa Code section 423.2(2005). The Petitioner can take a valid exemption certificate in good faith and not collect tax on the sale of the service warranty contract for resale under Iowa law. If the Petitioner is not a liable party to a taxable sales transaction pursuant to Iowa Code section 423.33(2005), then the Petitioner cannot be held responsible for the tax resulting from the transaction.